It's expensive to raise a family. Canadian governments recognize this, and have historically tried to ease the expense at least a little by offering parents with dependent children tax credits and deductions that others don't get.
In the last few years, the federal government has enacted additional small changes to the tax regime to allow parents to save a little more on their tax bills. Unfortunately, according to a recent survey by Leger Marketing for H&R Block Canada, many Canadians aren't seeing a difference on their tax returns. Only 45 per cent of Canadians said the new child tax credits have improved their tax burden. Older parents, aged 35 to 54, were most likely to say they've seen no difference -- 43 per cent, as opposed to 22 per cent of parents aged 18 to 34.
If the survey results are anything to go by, it could be Canadian parents aren't seeing tax savings because they're not aware of the programs, or because they're not aware they are eligible to claim the credits.
For example, almost as many people surveyed (33 per cent) thought they could claim $250 or less on the new federal Children's Fitness Tax Credit although the correct amount was $500 (35 per cent), with another 30 per cent having no idea how much they could claim. The credit translates to a $75 tax savings per child.
Nova Scotia actually had a fitness credit before the federal one. Several provinces have since mirrored Ottawa's fitness credit. British Columbia and Manitoba allow parents to claim $500, albeit at a lower percentage.
There are eligibility differences, too; while the federal program is for dependent children younger than 16, Manitoba extends eligibility to age 24, and Nova Scotia's is 18, so you need to check the rules in your province. Saskatchewan and Ontario offer refundable tax credits -- the others are non-refundable -- and Ontario's program extends to arts and culture programs similar to those covered by the federal Children's Arts Tax Credit.
Speaking of the Children's Arts Tax Credit, Canadian parents don't seem to be up to speed on that program either. Only 21 per cent of parents surveyed said they'd claimed the credit on their last return. Likewise, fewer than half surveyed (47 per cent) knew they could claim their dependent children's transit passes for credits.
Unfortunately, the government may be offering some small tax savings to parents but not everyone is taking advantage of the credits.
But it's not just deductions from the new children's programs that filers miss at tax time. There are other deductions that are commonly missed by Canadians, often because they don't know they're eligible, sometimes because they think the return isn't worth the hassle and paperwork -- silly logic, really, since every tax dollar saved goes into your pocket.
If family medical expenses (including those of your children under 18) exceed three per cent of your income, or $2,152, whichever is less, you can claim a 15 per cent tax credit. If your children are 18 or over and you pay for medical expenses, you may be able to claim the receipts but the income threshold is based on 3 per cent of their income, not yours. Often overlooked, though, is the fact that private health insurance premiums can be claimed as medical expenses; they often add up to half of the three per cent threshold on their own. And if you pay a portion of your prescriptions and dental bills, the amount you pay is also a medical expense, so keep your receipts.
And hang onto those receipts for charitable donations, especially if you haven't claimed them in a few years. Normally, you get a 15 per cent tax credit from the federal government on the first $200 you donate, and 29 per cent credit on donations that exceed that amount. But the federal government is kick starting Canadians' charitable instincts with a new program aimed at first-time donors.
In addition to the regular credit, the Canada Revenue Agency (CRA) will add an extra 25 per cent on your first $1,000 of donations if you and your spouse haven't claimed a donation since 2007. That raises the credit to 40 per cent for the first $200, and 54 per cent for the next $800. Since the provinces also have charitable donation credits, the overall total can be substantial. While it varies from province to province, in Alberta -- the most generous jurisdiction -- the first-time federal "super credit" and the provincial credit add up to $700 on a $1,000 donation.
This can be handy if you are sponsoring your children's fundraisers. The charitable donation receipts could offer a little relief at tax time.
The individual tax credits may not seem significant, but they can add up to a few more dollars in your pocket. And when you are raising kids, every little bit helps.
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